A Toniic for Start-Ups
Impact Investors at Toniic aim to create an ecosystem for investing in social entrepreneurs that mirrors the Silicon Valley way of doing deals. They know relationships are the key to keeping money moving.
When an aspiring social entrepreneur from India made a pitch recently about a new project, he had all the usual reasons to be nervous about seeking start-up capital. But he couldn’t have asked for a more receptive audience than members of a small but potentially powerful network called Toniic. Within hours of attending the videoconference connecting seven cities around the globe, members of the network were on the phone to pool their information and move toward a deal with confidence.
Launched in 2010, Toniic caters to active social impact investors who have committed to doing at least two deals per year. The first 30 angels have collectively pledged to invest $100 million in for-profit enterprises that have a social mission. “We recognize that early-stage impact investing is an important nut to crack,” says Toniic CEO Morgan Simon, one of five co-founders of the network. “By banding together as a community, we can find ways to make this a more viable investment category.”
Toniic founders bring deep experience in fields ranging from philanthropy to technology to venture capital. They’re also a far-flung group with members and partners in India, Europe, and North America. “We have married the best of local expertise with global sector expertise,” says Simon, who previously founded the Responsible Endowments Coalition and built a network of 100 colleges and universities interested in impact investments.
Access to reliable local information is essential to the Toniic formula. Without it, angels are apt to pull back from potentially high-impact deals. “They may come to the point of putting their first money into somewhere like Burkina Faso and start to wonder, ‘What lawyer am I going to call? How do we structure this thing? Is there really going to be an exit? How do I pay for all this due diligence?’” says Simon. “It can lead to disappointment. We want to get to solutions by creating interesting opportunities to collaborate across borders.”
Lisa and Charly Kleissner, founders of KL Felicitas Foundation and co-founders of Toniic, have spent several years talking up impact investing with other high net worth individuals and institutional investors. “People get excited, but there are a lot of hurdles between their desire and actually doing it,” admits Lisa Kleissner. Launching Toniic has been a way to move from living room conversations to a formalized community of investors.
In essence, adds Charly Kleissner, Toniic aims to create an ecosystem for impact investing that mirrors the Silicon Valley way of doing deals. After 20 years of successful work in that ecosystem, he knows that relationships are the key to keeping money moving. “We all do our due diligence by picking up the phone and saying, ‘Do you know this guy?’” Toniic aspires “to create the equivalent of that for social entrepreneurs worldwide,” he adds. “By building out this network of trusting friends globally, across three or four continents, we’re able to gain critical mass.”
One of the first deals to emerge from this new pipeline is an early-stage investment in Healthpoint Services, focusing on health clinics and water sanitation projects in India. The Kleissners, who have been active investors in India, were “the eyes on the ground” for Toniic. Through phone calls and followup meetings, they shared their observations with others in Toniic. “We also pulled information from potential investors who looked at the deal but didn’t invest. Some might shy away because of perceived risks. But if we believe the impact is there,” Lisa Kleissner adds, “we’ll jump in and see if we can make this a viable business.” In the social capital sector, she adds, worthy deals don’t necessarily arrive “all nice and neat and tied up.”
Toniic is sustained by membership fees, which run $5,000 for the basic level and $10,000 for founding members. Recruitment has been “highly intentional,” Simon says. “We want to grow based on people who want to be part of a community of action- oriented investors, wherever in the globe they might be.”